The NZD/USD pair attracts some dip-buying during the Asian session on Wednesday and climbs to a fresh daily high, around the 0.5965 region in the last
hour. Spot prices move back above the 200-hour Simple Moving Average and might now look to build on the recovery from sub-0.5900 levels or the lowest level since November 2022 touched earlier this week.
The intraday uptick is sponsored by a modest US Dollar downtick, led by some profit-taking in the wake of a mildly softer tone surrounding the US Treasury bond yields and against the backdrop of the recent rise to a more than two-month peak. Apart from this, hopes for more stimulus from China, along with signs of easing US-China trade tensions, further benefit antipodean currencies, including the New Zealand Dollar .
It is worth recalling that the US Commerce Department's Bureau of Industry and Security announced on Monday that it will remove 27 Chinese entities out of its Unverified List. China welcomed the move and said that it is conducive to normal trade between the two nations. This comes ahead of US Secretary of Commerce Gina Raimondo's visit to China on August 27-30, for meetings with senior Chinese officials and US business leaders.
That said, growing concerns about the worsening economic conditions in China should keep a lid on the optimism in the markets and the risk-sensitive Kiwi, which reacted little to rather unimpressive domestic data. In fact, Statistics New Zealand reported that Retail Sales declined by 1% during the second quarter of 2023, marking an improvement from the 1.6% fall in the previous quarter and beating estimates for a 2.6% contraction.
Furthermore, the Reserve Bank of New Zealand had already indicated that it was done raising rates. This, along with firming expectations that the Federal Reserve will keep interest rates higher for longer, warrants some caution before placing aggressive bullish bets around the NZD/USD pair. Market participants now look forward to the release of the flash PMI prints from the US for some meaningful impetus.
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